Hudson County Takes First Step to Buy Ailing Ferry Service

By RONALD SMOTHERS

Published: November 24, 2004

A proposal by a group of Hudson County mayors to acquire the financially ailing New York Waterway won a first round of approval on Tuesday from the county's Board of Freeholders after a long debate.

The board narrowly agreed to have the Hudson County Improvement Authority begin a detailed analysis of the proposal and start the process of issuing $38 million in bonds to do so.

But the vote was immediately disputed, with opponents threatening to go to court over the way it was conducted. And under state law, the resolution would again have to be approved by the nine-member board in a public session in two weeks to be final.

Debate over the measure lasted nearly two hours, during which new details emerged about how and why New York Waterway, which has dominated the ferry industry, has fallen into financial trouble. Various proposals are now on the table to try to maintain the company's routes, with a rival ferry company, the Port Authority of New York and New Jersey and the Hudson County mayors all in talks over possible solutions.

On another front, representatives from Hudson County met late yesterday with Mayor Michael R. Bloomberg of New York. The ferry service delivers some 30,000 riders a day between New Jersey and Manhattan, serving Midtown and the Financial District.

Critics of the Hudson County plan argued that the proposed purchase of the company and its routes amounted to a bailout of a private company. They also questioned whether a county government could successfully operate an enterprise that experienced business people could not. The plan calls for the improvement authority to raise the money for the purchase and for individual cities to operate the routes that serve their communities.

The opponents, led by Freeholders William O'Dea and Radames Velasquez, both Democrats of Jersey City, also argued that ferry service would not suddenly stop if they did not act.

''The concern I have is the way we are being forced and rushed into things,'' Mr. O'Dea said. ''It should be the Port Authority and New Jersey Transit doing this, and internally they have looked at this and see problems.''

Supporters argued that 30,000 or so daily commuters relied on the ferry service, and that it is especially important to residents of some high-priced residential and commercial developments along their shores.

The vote, at first, had four members in favor, three opposed and two abstentions. It needed five votes in favor to pass.

After seeing that the proponents had failed to get a majority, one of the abstaining members, Barry Dugan, a Democrat of Bayonne, sought to change his vote.

After heated exchanges and objections from opponents over the way the measure was reconsidered, Mr. Dugan was allowed to change his vote to support the measure. The board subsequently voted down a motion to provide legal counsel to the opponents so they could challenge the voting procedure in court.

According to the proposal put together by the Hudson County Improvement Authority and presented to the freeholders, New York Waterway has debt of about $53 million, $40 million of which is secured by equipment and routes and $13 million of which is secured by personal guarantees from its owner, Arthur Imperatore. The operation, with 35 boats, 20 routes and 54 buses serving terminals, is losing about $500,000 a week, improvement authority officials said.

The authority, in its analysis, concluded that the company had over expanded after the attacks of Sept. 11, 2001, which brought a great demand for ferry service. It also concluded that New York Waterway was over-leveraged and had failed to cut costs as revenues declined.

The authority alsoconcluded that New York Waterway had failed to anticipate the impact of the reopening of PATH service in 2003. Before that, the company's ferries were logging 65,000 passengers a day. Since then, according to the presentation to the freeholders, the company had been unsuccessful in negotiating cost concessions on things like docking fees.